Margin call refers to a warning issued by the stockbroker as soon as the margin account starts to run short of funds. It is a message triggered to ensure the trader has the minimum balance maintained in their account for the stockbrokers to rest assured of the security they have received against the loan.
A margin call is a broker demand requiring the customer to top up their account, either by injecting more cash or selling part of the security to bring the account to the required minimum. The customer is allowed a short grace period to take the required action to meet the margin requirements. If the customer does not respond to the margin call, the broker may dispose of part of the securities to restore the account to the required margin level.
A margin call is a demand from your brokerage firm to increase the amount of equity in your account to bring it into compliance with margin requirements.
A margin call is nothing that any trader wants to deal with, but if you make the decision to use margins, it will always be a possibility. While margins can expand profitability, they can also result in larger losses, and investors who use them need to consider the extent of these potential losses before getting involved.
The margin call’s purpose is to make the investor quickly put up more cash or sell some purchased shares, to ensure there’s enough collateral to cover the margin loan. Share this. Borrowers often need money to buy things that cost more than the cash they have on hand, such as homes and cars. Banks and other lenders will provide the money if.
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